Daily FX Report

Good morning from wonderful Hamburg and welcome to Varengold Bank's Daily FX Report. The Federal Reserve extended its low-borrowing-cost policy once again and higher prices for raw material affected parts of the FOREX market especially the higher yielding assets

Markets review

The Federal Reserve kept the federal funds rate target for overnight loans between banks near zero and repeated its pledge to keep it there for an 'extended period'. The Fed also said that the emergency measures to prop up the housing market will end as planned this month. After this decision the JPY climbed near to a one-week high versus the USD on concern the Bank of Japan will abstain from significant easing measures. The EUR/JPY opened the Asia session higher and may head for a second winning day as the rating agency Standard & Poor's affirmed its BBB+ long-term rather A-2 short-term credit rating for Greece. The GBP/AUD raised more than 130 pips yesterday as U.K. stocks strengthened and a new poll eased concern that the election this year won't produce a clear winner.

The CAD rose to the strongest level in almost two-years against the USD. It climbed as much as 0.6 percent at its highest level as gold and crude oil gained. Raw materials account about half of Canada's export sales.

The CHF strengthened against 12 of its 16 most active traded counterparts as the government raised its forecast for 2010 growth amid improved consumer spending. The State Secretariat for Economic Affairs said the Swiss gross domestic product may expand 1.4 percent this year. The USD/CHF declined yesterday from 1.0619 at its opening to 1.0534 at its lowest level.

Also the AUD gained versus the JPY as well as the USD as raw material prices increased. The AUD/USD touched a two-month high while the AUD/JPY traded nearly unchanged around 83.00 level during the early Tokyo trading hours. The NZD, as well a commodity-linked currency, climbed to a six-week high against the USD yesterday but as a report showed this morning that New Zealand's consumer confidence declined for a second quarter it came under pressure and lose some of its earlier gains.

Technical analysis

USD/JPY (2 Hour)

Since the middle of January the USD/JPY has been trading close to a bearish trend line. After the USD reached its lowest level at the end of February the currency pair started a recovery phase close to a bullish trend-line as you can see in the picture. A rising Momentum may indicate further bullish movements near to the resistance around 90.82

EUR/JPY (2 Hour)

The EUR/JPY broke through its mid-term bearish trend-line after it fell to the 120.00 level last month and crossed the third Fibonacci fan at last. But the falling positive DMI and an ADX at such a low level could indicate that the bulls have not enough assistance to cross the next resistance at 124.48. If the currency pair will fail to cross it may decline near to the next support around 123.67 rather its bullish-line

GBP/AUD (2 Hour)

The GBP has been trading close to a bearish trend-line since the 6th of February. Now it seems that the bulls entered the market again and pushed the currency pair above the trend-line close to the resistance point around 1.6617. It remains to be seen if the trend-line could cross sustainable and if the support at 1.6543 will be strong enough. The high MACD indicator shows a bullish market environment

USD/CHF (2 Hour)

As you can see the USD/CHF lost the support of its bullish trend-line in the middle of February and began a bearish countermovement. This bearish movement accelerates in March once more and drives the USD/CHF below the 61.8 % Fibonacci retracement line. As long as the second bearish trend-line would not be crossed the bears maybe test the level around 1.0516. On the other hand-side the RSI shows an oversold market which could stop the bears

USD/CAD (Daily)

Having the USD/CAD lost its important long-term support at 1.0214 this week it cleared the way to the parity. As you can see in the chart the next long-term support is located near the pari level and if the CAD will fell below the second Fibonacci Fan again it may boost the bears. Otherwise the RSI, which shows an oversold market, could lead the bulls back into the market and if the USD could cross the level around 1.0214 again the next resistance is located near to 1.0337.

AUD/USD (2 Hour)

The AUD/USD has been trading in a bullish environment since the 31st of January and even boosted this trend one month later. Now the AUD climbed close to a bullish trend-line to the next support at 0.9175 and if it could stay there sustainable we maybe have to allow further bullish movements near to the 0.9224 level. As long as the MACD indicator is trading above its Signal line it could also support the bulls.

Varengold Bank

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